Exchange Traded Products — the tail is wagging the dog in some places, and ETPs are very liquid, but at a cost of reducing liquidity to the rest of the market

Low risk margins — valuations for equity and debt are high-ish

Demographics — mostly negative as populations across the globe age

Wages in the “developed world” are getting pushed to the levels of the “developing world,” largely due to the influence of information technology. Also, technology is temporarily displacing people from current careers.

This is worth watching. It seems like there isn’t that much advantage to corporate borrowing now — the arbitrage of borrowing to buy back stock seems thin, as does borrowing to buy up competitors. That doesn’t mean it is not being done — people imitate the recent past as a useful shortcut to avoid thinking. Momentum carries markets beyond equilibrium as a result.

If the Federal Reserve stimulates by duping getting economic actors to accelerate current growth by taking on more debt, it has worked here. Now where is leverage low? Across the board, debt levels aren’t far from where they were in 2008:

Fiscal policy will remain riven by disagreements, and hamstrung by rising entitlement spending.

Long Treasuries don’t look bad with inflation so low.

Leave a little liquidity on the side in case of a negative surprise. When everyone else has high debt levels, it is time to reduce leverage.

Better safe than sorry. This isn’t saying that the equity markets can’t go higher from here, that corporate issuance can’t grow, or that corporate spreads can’t tighten. This is saying that in 2004-2006, a lot of the troubles that were going to come were already baked into the cake. Consider your current positions carefully, and develop your plan for your future portfolio defense.